Blowing Up Government

Now that hes back from his presidential-style trip to open the new Museum of Tolerance in Israel, visit with the King of Jordan and cheer up wounded troops from California at one of the U.S. militarys major staging areas in Germany, our action guv returns to the next group of big items on his to-do list. He still has a long way to go on the budget crisis; hes getting started on energy; the prison crisis keeps percolating. And his effort to reform state government is running behind what looked like an accelerated schedule, beset by controversy within both his administration and the Capitols lobbying and contracting communities.

Are Democrats worried by the Big Reorg? They might or might not be, if only they knew what the plan was. Maybe well find out after they read about it here.

One of Arnold Schwarzeneggers top promises in the recall campaign was to restructure both Californias government and the ways it does business. Its continued to be a big priority for him. The most quoted line in his State of the State address was, I dont want to move the boxes around. I want to blow them up. The Web site for this Schwarzenegger pet project, the California Performance Review (CPR), is one of a handful of sites with links on Schwarzeneggers own Web site. (The other two are the emergency Amber Alert system and Maria Shrivers Web site.)

Here is how the governors plan to blow up the boxes of Californias government, in which existing departments are folded into others or eliminated altogether and in which officials say some 200 state boards and commissions are to get the ax, is coming along. It is very controversial.

Working in secret, with 250 people gathered from throughout the ranks of state government, operating on the site of the late Technology, Trade & Commerce Agency, the CPR is charged to come up with a plan to reorganize state government, and review how each department functions, to make government more efficient and responsive.

In a sense, this is the fabled audit of state government that Schwarzenegger promised in his campaign but did not really deliver with his appointment of finance director Donna Arduin, who barely had time to review the situation before plunging into the next budget proposals. The administration hopes to wring long-term savings out of the CPR, especially in restraining out-of-control purchasing and in putting clear auditing practices in place in each department. The lack of all this is the main reason why the prisons budget has ballooned even beyond what was approved by the prison guards uniondominated Legislature.

It might be best if the CPR took on a third function, in addition to reorganizing the departments and making them work more efficiently. As Democrats like Treasurer Phil Angelides, a likely Schwarzenegger opponent in 2006, point out, it is not just programmatic expenditures that need to be reviewed but tax expenditures as well. The state is losing $2 billion a year in revenue from targeted tax cuts instituted since 1990. Some are useful, others are not. While Schwarzenegger may have to respond to that issue, which is a strong one politically, its not part of the CPR now, revealing a conventional Republican bias in what is otherwise an intriguing endeavor.

The project is, as it happens, behind schedule, and has run afoul of palace intrigue within the administration and opposition from lobbyists and contractors who want no change in their existing relationships. Lobbyists dont want to have to master a new structure of influence. Contractors dont want to have to deal with new bureaucrats or have more competitive bidding.

Its not smart to come out openly against Arnold or efficiency, says one veteran Capitol lobbyist. Rest assured we are not out to make our lives harder, either by offending him in public while hes hot or making our jobs more difficult by too much change.

The fast-tracked plan had been to present the restructuring plan by April 30 so that the Little Hoover Commission  the states existing government-efficiency body  could pass on it and move it to the Legislature for an up-or-down vote this summer. (Schwarzenegger can do some things by executive order.)

But the plan was waylaid in a private meeting of the Schwarzenegger Cabinet on April 21. Some Cabinet members were taken aback at the scope of the changes, not least to their turf. Chief of staff Pat Clarey, a veteran lobbyist, was said to worry that it was too much too soon for a governor with a great deal on his plate.

Said one insider: The guys pushing this [Texas efficiency guru Billy Hamilton, veteran California bureaucrat Chon Gutierrez and Schwarzenegger adviser Paul Miner] may have made a mistake putting this out at a Cabinet meeting. The Cabinet should be included in such sessions, but when you have something this far-reaching that affects so many peoples turf internally, and so many peoples livelihoods externally and maybe internally when they leave government, its not surprising it got a mixed reaction.

Schwarzenegger is personally behind this, and the plan moves to its next fallback deadline, of June 30. All this has been shrouded in secrecy, perhaps unnecessarily.

So far, the Schwarzenegger administration is at least as secretive as the Davis administration.

CPR spokesman Pete DuFor says that the quest for greater efficiencies in the delivery of services, though a long-term process, is coming along well and that there will be a myriad of recommendations by June 30. CPR experts have fanned out throughout the government, examining how things are done and soliciting ideas.

Many have been fearful about the restructuring part of the CPR, partly on the basis of a Schwarzenegger comment in the campaign in which he seemed to say he would eliminate the Environmental Protection Agency. Top environmentalists had feared that environmental functions would all be subsumed in a superagency that would include the existing Food & Agriculture agency. They doubted that, in such an agency, highly regarded Environmental Secretary Terry Tamminen, who was opposed in the first place by some of the old Pete Wilson crowd, would come out on top.

But, as youll see, that wont happen.

Nearly 100 departments and agencies would be folded into 11 omnibus agencies, the heads of which would serve in the governors Cabinet. In addition, the states finance department, tax board, information services and retirement programs would be part of a new Office of Management & Budget. This would be overseen by the Governors Office.

The states largest agency, Business, Transportation & Housing, now headed by Sunne McPeak, would be eliminated. But it would be replaced by a powerful new omnibus agency on Infrastructure (which McPeak would likely head), which would be in charge of all planning and programs on housing, transportation, and water and energy facilities, cutting through an alphabet soup and eliminating the states Energy Commission and Power Authority in the process.

Food & Agriculture would not be part of the same agency as Environmental Protection. Each would retain separate functions, along with a Resource Management agency not unlike the one today. But many boards and commissions would become divisions of these omnibus agencies, as would be the case with the rest of the new regime.

The other omnibus agencies would be Education & Workforce Preparation, Labor & Economic Development, Health & Human Services, Public Safety & Homeland Security (picking up the Highway Patrol from the old Business, Transportation & Housing), Military & Veterans Affairs, Commerce & Consumer Protection (also picking up from the old Business agency), and a new Corrections Commission running the reeling state prisons and Youth Authority operations.

With all this still on the drawing board, Schwarzenegger has moved to eliminate only one agency so far, the Power Authority, which during the campaign he seemed at times to believe was an attempt by state government to run the electricity market, which it is not. Ironically, his legislation to kill it has resulted in a rare victory for Angelides, as it has failed to get out of legislative committees. With an overall plan, Schwarzenegger may just be more successful.